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July 26, 2021
December 13, 2024
By Evans Momodu
5 minute read
Ontario Premier Doug Ford has threatened to cut off energy exports to the United States in retaliation for President-elect Donald Trump’s proposed 25% tariffs on Canadian imports.
Ford’s remarks underscore the potential for escalating tensions between the two nations as the tariff dispute unfolds.
Ford specifically mentioned disrupting electricity exports from Ontario, which regularly supplies power to U.S. states like Michigan, New York, and Wisconsin.
While Canada is a major exporter of energy to the U.S., Ontario is not a crude oil producer, making electricity the likely target of Ford's threat.
Although U.S. electricity imports from Canada account for less than 1% of America’s total annual consumption, they are crucial for grid balancing, particularly during periods of peak demand or low domestic supply.
For example, the United States imported 38.9 million megawatt hours of electricity from Canada last year, worth approximately $3.2 billion.
Experts note that the disruption of electricity exports would create temporary challenges for U.S. states reliant on Canadian power.
However, the United States has sufficient capacity and resources to address such disruptions relatively quickly by reallocating domestic energy supplies or expanding generation capacity.
The broader concern lies in the possibility of Canada extending retaliation to other key sectors.
Analysts suggest that restricting exports of materials like aluminum and nickel—essential for manufacturing—could wield greater leverage over the United States, given the difficulty of sourcing replacements quickly.
A full-blown trade war between the U.S. and Canada would likely inflict economic pain on both countries, potentially destabilising industries and raising costs for consumers.
Such a scenario could deepen economic uncertainty, particularly for Canada, whose economy is heavily intertwined with U.S. trade.
While Ford’s comments reflect growing frustration in Canada over the looming tariffs, any significant retaliatory action would likely require federal approval from Ottawa, ensuring that decisions align with national policy considerations.
Patrick De Haan, head of petroleum analysis at GasBuddy, stressed that Canada’s threats signal its unwillingness to accept the proposed tariffs without a fight.
However, RJ Johnston of Columbia University’s Centre on Global Energy Policy believes that the U.S. is well-positioned to weather any immediate energy-related retaliation.
Johnston emphasized that Canada’s greatest leverage lies in its exports of critical raw materials rather than electricity.
Source: CNN
